IT Management Slideshow: 7 Ways to Reduce Costs as the Recession Eases

By CIOinsight |
Posted 07-22-2009

7 Ways to Reduce Costs as the Recession Eases

Gain visibility into spend, relationships and agreements by knowing your vendor mix and what technologies are being used by whom. Be aware of major vendor contract milestones, such as renewals and maintenance increases, well ahead of time.

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Define a strategic plan for your organization. Every company has a unique spend management strategy. What is yours? Are you trying to reduce fixed operating costs? Are you asking vendors to work on a performance basis? Define goals and strategies that reflect your unique spending and technology priorities.

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The opportunity for savings is big after the deal is signed. Define guidelines for vendor spending throughout the relationship. Include leverage-driving activities such as determining fair market value pricing before you begin negotiations, understanding market dynamics such as prospective M&A activity; keep abreast of pricing and model updates.

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Segregate the role of selector and negotiator. The person selecting a vendor and scoping a project shouldn't handle contract negotiations, because the time and relationship-building invested make it hard to remain objective. Vendors are counting on that as they negotiate final pricing and terms - along with their team's quota attainment.

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This doesn't have to be a complicated new hire ordeal. Simply designate someone within your IT staff to manage and monitor all vendor spending. It's a sure-fire way to maintain spend visibility.

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If you haven't heard this from your vendor at least three times, you haven't asked for enough. The art of the sale is built on the understanding that asking price is never selling price.

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There has never been a better time to demand more from vendors, so think creatively. Ask vendors to agree to a pay-for-performance or shared-savings approach. Negotiate free licenses. Determine if you really need premium support on every software purchase.